The U.S. dollar is starting to weaken once more as sellers're pushing the U.S. Dollar Index (DXY) downward, which might strengthen the momentum of Bitcoin (BTC) in the long run.
Alternative assets such as Bitcoin and gold are priced from the buck. Hence, when the DXY starts to drop, often it induces BTC to rally against the dollar.
Dollar's share of international reserves is falling fast
According to Holger Zschaepitz, a market analyst in Welt, the U.S. dollar's share of international reserves is quickly declining as countries including Russia are pursuing a de-dollarization strategy and opting for gold.
When the pandemic was declared in the first quarter of 2020, the demand for the dollar increased as investors flocked to money since it's the international reserve currency.
However, due to different factors such as the presidential election as well as the negative outlook on COVID during this past year, the dollar struggled to outperform other currencies such as the Japanese yen and the Swiss franc.
"OOPS! Dollar in decline. While Dollar's share of global reserves originally increased at beginning of pandemic, it has since diminished & currently stands at only 59%--1.5pp decline QoQ & lowest since 1995. Part of decline due to depreciation, but also due to busy USD selling."
If the decrease of the U.S. dollar proceeds, there is a strong likelihood that Bitcoin will continue to rally in April.
Historically, April has been a strong month for Bitcoin during the past ten years, recording positive profits for five consecutive years since 2016.
"Law of averages gives #Bitcoin a $83,000 price goal for April. Avg over 10 years in April +51%"
Miners appear to be amassing Bitcoin
Atop the positive macro factors for Bitcoin, Lex Moskoviski, the CIO at Moskoviski Capital, pinpointed that miners recently started ramping up their BTC holdings.
On one day, miners added 4,380 Bitcoin, that the qualitative investor and trader explained as a developing trend. He said:
"Miners started really ramping up their rankings. 4,494 #Bitcoin piled today on aggregate. Another 4,380 #Bitcoin stacked by miners yesterday. Looks like a fashion, indeed."
When miners sell their holdings, Bitcoin typically sees a pullback as it could cause greatly leveraged orders from the futures market to view cascading liquidations.
If miners are hoarding Bitcoin and piling BTC with the expectations that the cryptocurrency will appreciate, it lessens the likelihood of a severe sell-off in the near future.
In the near term, whether Bitcoin stays above the $58,000 support region remains key. If it continues to unite over it, the odds of it viewing a strong breakout above the $60,000 resistance level considerably increases.